While data centers are straining Lower 48 power grids and developers are grappling with increasing local opposition to proposed projects, developers are looking north.
Alaska offers some unmatched advantages for data centers: millions of acres of land, vast energy potential, abundant water, and an Arctic climate to cut cooling costs. Meanwhile, Alaska’s statewide legal regulation targeting data centers is minimal, and the tax burden low. There are no specific, statewide data center regulations (a recent 2026 bill to require data centers to bear their own power and infrastructure costs failed),1 and the State has no statewide sales tax, property tax, or real estate transfer tax, and no income tax on pass-through entities such as LLCs.
Against this are Alaska’s other attributes (not all attractive to investors): vast distances, complex logistics, minimal infrastructure, and Alaska’s unique legal regime for land ownership and resource use. Other challenges loom. Local ordinances are focusing on data center zoning, and Alaska’s population centers face energy infrastructure challenges, including dwindling local natural gas supply.
Translating Alaska’s advantages into lasting success is a local game.
The Big Picture
The United States has more than 3,000 operational data centers and 1,500 under development, according to the Pew Research Center.2 Data centers consume massive amounts of water and power. According to Goldman Sachs, data center power demand will double by 2027 to 66 gigawatts.3 Thirty percent (30%) or more of that power is used for cooling,4 which is a key driver of power usage effectiveness (PUE). Increasingly, developers are moving into rural America, away from urban areas.5
A wave of political opposition – including from business-friendly republicans such as Texas Gov. Greg Abbott and Utah Gov. Spencer Cox – is growing. On June 10, Abbott called for data centers to pay their own grid infrastructure costs and shield consumers from increased electricity costs. In late May, Cox signed an executive order to protect Utah residents from increased utility bills and to protect the Great Salt Lake from water consumption associated with celebrity businessman Kevin O’Leary’s proposed Stratos Hyperscale data center in northern Utah.
Alaska seems to offer answers to all of these issues.
Alaska’s Governor Michael Dunleavy is an ardent proponent of bringing data centers to Alaska.6 The State has millions of acres of land eligible for lease and abundant fresh water. Alaska’s North Slope has 37 trillion cubic feet of proven natural gas reserves7 – one of the largest proven, undeveloped natural gas resources in the world. Other potential clean energy sources abound: geothermal, wind, tidal, and hydro. Meanwhile, Alaska is cold – Alaska’s mean annual temperature is 35° Fahrenheit (compared to 65° in Texas) – a critical advantage where AI workloads demand volumes of power and water for thermal management and cooling.
Potential or Puzzle?
All of this potential has drawn developer interest.
- Stak Energy. Startup Stak Energy has proposed a 640-acre AI data center on Alaska’s North Slope adjacent to the North Slope oil and gas fields. Drawing from local natural gas reserves, the project proposes a private, self-contained gas-fired power generation system capable of producing 1,000 – 3,000 megawatts (1-3 gigawatts) of electrical power.8
- U.S. Air Force. The Air Force has offered leases at three Alaska military sites – Joint-Base Elmendorf Richardson in Anchorage, Eielson Air Force in Fairbanks, and Clear Space Force Station in Anderson, Alaska – for development of AI data centers.9
- Micro-Datacenters. INVITE Networks, a technology provider and consultant based in Salt Lake City, is pitching initiatives for edge-computing small modular data centers taking advantage of Alaska’s cold temperatures and energy resources.10
Who Owns Alaska?
But Alaska’s dazzling potential can distract from its complexity.
For example: Alaska land ownership is the inverse of the Lower 48. Individual, private ownership is scant; the State is almost entirely owned by local, state, and federal governments (approximately 89.5%), and Alaska Native Corporations (approximately 10%). Less than 1% is in non-Native private ownership.11
For the developer, this means either an intensive public land lease process or working with an Alaska Native Corporation and, in either case, a likely ground lease for development. While a ground lease has many advantages for a developer, such as lower up-front capital costs, these are not likely to be typical ground leases.
Federal U.S. military leases (such as those being offered in Alaska for data centers) are issued subject to a highly regulated process, and lessees must comply with extensive national security and financial requirements.
State of Alaska land dispositions occur in a myriad of ways,12 however most data centers would need a basic land lease for a 50-year term. State land leases are managed by the State of Alaska Department of Natural Resources. State ground leases can be restrictive, especially in connection with assignment or transfer.
A high-value alternative for data center developers may be working with Alaska Native Corporations (ANCs).13 ANCs own 44 million acres of land in Alaska and are the state’s largest private landowners. Experienced and sophisticated in an array of businesses, ANCs regularly develop portions of their lands but, in practice, rarely convey fee title.
Alaska’s power system is also unique. Power generation is highly fragmented with two separate, non-interconnected electrical grids in Southeast Alaska and the so-called “Railbelt” from Fairbanks to Anchorage, then south to the Kenai Peninsula. The Railbelt system is the state’s largest but is facing a potential natural gas shortage in the coming years.
Most large, remote industrial users rely on behind-the-meter private power. North Slope oil producers self-generate power from natural gas. The Red Dog Mine in northwest Alaska relies on diesel generators, as does the Kensington mine near Juneau. The proposed Graphite One mine near Nome, Alaska also plans self-contained diesel power production, although nearby geothermal energy is being evaluated as an alternative electric power source.
The Coming Wave
For now, there are no specific, statewide regulations targeting data centers.
According to Multistate, 27 states have or are enacting comprehensive statewide data center regulation.14 Alaska Senate Bill 250, which would have required data centers to enter into contracts to ensure grid infrastructure costs and power cost increases attributable to a data center are paid by it, died in committee in May 2026.
The Municipality of Anchorage, meanwhile, amended its Title 21 Land Use code, adding a new land use category for “data centers”. The new provisions limit data centers to commercial/industrial districts and require a conditional use permit and use-specific performance standards.15
Other challenges loom: Southcentral Alaska is currently facing an energy supply crunch, specifically regarding the supply of Cook Inlet natural gas that powers the communities along Alaska’s southern coast – including Anchorage – up to Fairbanks. With increased power prices and future supply risks, developers may need to expect to pay their own costs to offset impacts on the existing grid. Power purchase agreements may need to handle specialized rate classes designed to shield local Alaskan consumers from increased utility bills.
Alaska has abundant water, but no large-scale user has automatic rights to surface or ground water. Large-scale developers must apply for legal water rights through the state. Although fresh water is abundant, there may be powerful, competing interests, especially Alaska’s highly valuable salmon spawning streams, including subsistence users and commercial fisheries.
Waste treatment may also pose hurdles. Alaska has limited infrastructure for the disposal and treatment of industrial regulated waste.
In remote locations with sub-zero temperatures, handling wastewater can be a major operational challenge. The average annual temperature at Deadhorse, Alaska – the closest population hub to Stak Energy’s proposed 700-acre development on Alaska’s North Slope – is 14° Fahrenheit. In winter, temperatures at Deadhorse regularly reach -40°.
Rather than on-site wastewater treatment, Stak proposes in its business plan that all wastewater from the facility and workforce (estimated to be 1,500 people during construction) will be hauled 26 miles to Deadhorse by truck for disposal.16
Whether and how state and local governments in Alaska decide to regulate data centers remains to be seen. For now, Alaska remains the Last Frontier in the data center boom.
Please contact Phil Blumstein, Jackson Morawski, or Ben Spiess for questions.
1 Alaska Senate Bill 250 (February 2, 2026) https://www.akleg.gov/basis/Bill/Detail/34?Root=SB%20250.
2 Most New Data Centers in the U.S. Are Coming to Rural Areas, Pew Research Center (Apr. 13, 2026), https://www.pewresearch.org/short-reads/2026/04/13/most-new-data-centers-in-the-us-are-coming-to-rural-areas/.
3 US Data Center Power Demand Projected to Double by 2027, Goldman Sachs (May 20, 2026), https://www.goldmansachs.com/insights/articles/us-data-center-power-demand-projected-to-double-by-2027.
4 Energy Demand from AI, The International Energy Agency at https://www.iea.org/reports/energy-and-ai/energy-demand-from-ai.
5 According to the Pew Research Center, 67% of planned data centers are in rural areas, while 87% of existing data centers are in urban ones. https://www.pewresearch.org/short-reads/2026/04/13/most-new-data-centers-in-the-us-are-coming-to-rural-areas/.
6 Alaska Governor Pitches State as a Data Center Hub for AI-Era Compute, Data Center Knowledge (October 7, 2025), https://www.datacenterknowledge.com/data-center-site-selection/alaska-governor-pitches-state-as-a-data-center-hub-for-ai-era-compute.
7 See Alaska Gas Development Corp. https://agdc.us/alaskas-lng-project/alaskas-natural-gas-supply/ and U.S. Energy Information Administration, U.S. Crude Oil and Natural Gas Proved Reserves, Year-end 2024 https://www.eia.gov/naturalgas/crudeoilreserves/.
8 Stak Energy Application for Lease of State Land, March 12, 2026, https://aws.state.ak.us/OnlinePublicNotices/Notices/Attachment.aspx?id=162057.
9 See RFLP Artificial Intelligence (AI) Data Center Development at Joint Base Elmendorf Richardson, Eielson Air Force Base, and Clear Space Force Station, Notice ID: AFCEC-26-R-0006, https://sam.gov/workspace/contract/opp/48447d3383784571a5a37119d19e5751/view.
10 See INVITE, Guide to AI Datacenters in the Last Frontier – Powering Alaska’s Future https://invitenetworks.com/contact/alaska-services/powering-alaska-future/.
11 Alaska Department of Natural Resources, ‘Who Owns/Manages Alaska?’ https://forestry.alaska.gov/Assets/pdfs/posters/07who_owns_alaska_poster.pdf.
12 3 Leases and an Easement: State of Alaska Leases & Use Rights, Landye Bennett Blumstein LLP presentation to the Alaska Bar Association Real Estate Section – May 2026. https://lbblawyers.com/wp-content/uploads/2018/06/Alaska-State-Land-Leases-Presentation-to-the-Real-Estate-Section-of-the-Alaska-Bar05-28-2026.pdf.
13 Alaska Native Corporations are entities authorized under the 1971 Alaska Native Claims Settlement Act, 43 USCS § 1601 et seq (“ANCSA”). ANCSA settled Alaska Native land claims in exchange for the conveyance of millions of acres of land to the Alaska Native Corporations. ANCSA lands are private lands which may be sold, leased, or developed, however they are subject to the complete control of the owner corporation and, in certain circumstances, are protected under the federal law. In practice, ANCs regularly develop their lands but rarely convey fee title.
14 See Multistate, April 14, 2026, Federal AI Data Center Policy Meets Resistance from State Lawmakers, https://www.multistate.us/insider/2026/4/14/federal-ai-data-center-policy-meets-resistance-from-state-lawmakers.
15 AO No. 2026-27, https://www.muni.org/Departments/Assembly/Documents/AO%202026-27.pdf.
16 Stak Energy Application for Lease of State Land, March 12, 2026, https://aws.state.ak.us/OnlinePublicNotices/Notices/Attachment.aspx?id=162057.
